The Pareto principle also is known as the 80/20 rule.
The law of the vital few, or the principle of factor sparsity states that, for many events, roughly 80% of the effects come from 20% of the causes.
Now for those that love trivia, they will be awear that the Pareto principle goes back to land ownership in Italy in late 1800 when 20% of the Italian population owned 80% of the land.
OK, you may now be scratching your head and wondering where I am going with this, below are the four most common 80/20 related to sales and marketing.
Sales & Marketing 80/20’s
1. 80% of sales come from 20% of your clients
Many businesses are dependent on their largest accounts; this makes them both secure and vulnerable at the same time.
2. 80% of sales come from 20% of your products range
Product diversification may have limited impact on your business; this can also hinder a companies ability to grow, diversify its range and be considered agile.
3. 80% of sales come from 20% of your salespeople
Top salespeople aren’t easy to find, and are and should be considered as a short to medium-term employment. When things aren’t going well that 20 % will move on quickly, leaving the company with a majority that alto often is formed out of the settlers and also-ran.
4. 80% of your complaints come from 20% of your customers
One commonly cited customer service rule of thumb, caution and concern should always be taken into accounts as just because they are the ones complaining, what is happening within those that don’t put the effort in to make a complaint.
How does this tie in with optimistic prospecting?
For the purpose of this article on optimistic prospecting, I will focus on number 1.
With the most common anxiety and concern in many businesses, they seem to find themselves with is an axiom of business management that “80% of sales come from 20% of clients”.
Having 80% of sales come from 20% of clients is only a problem when the business starts to fails. Constantly stimulate the 80% that form the majority, takes time, effort and dedication.
Businesses fail in good times and bad times.
While there is no fall-proof method of stimulating 80%, a constant, focused flow of stimulus does offer some protection and security.
The Social Media Question
For those that wonder WHY so much time, effort and energy is focused on social media, a clew in the line above.
Now if you and you’re colleagues are truly risk-averse, then having just 20% of your customers/clients provide 80% of the business revenue is not Ideal.
So let’s look at a different way; 80% of a business customer base is transient, and the reasoning behind it is nearly always unclear.
While you can take out insurance to protect certain business risks; allocating time and effort to understand your customers and clients, reducing business risk is needs is cheaper, and can even return a profit.
Sales is or should be dominated by two core positions; asking questions and then listening to the answers.
Below is my offering to provided you with the draft for the questions to ask your self and your 80%
- Are or is the 80% committed or connect to your company in some way or other Yes/NO?
- Do they or do they not have a regular need for your product or service?
- Do they use you as a supply option, when others can’t help?
- Do they use your competitor to supply a product or service you could supply?
- What would it take to increase their business with your company?
Dare to go where no one has gone before!
Now, none of the above is rocket science, or new, but if you fail to focus on what you already have; the choice is yours.
I am not advocating that you stop doing your other outbound marketing & sales processes, but perhaps add this to your portfolio.
Allow me to provide a few interesting facts for those that are not as confident on cold calling as some are.
If you send some of your time on calling and having a conversation with the 80%
- You will be received warmly.
- You will gain valuable feedback.
- You will find business opportunities.
- You. will strengthen your relationship with them.
- And someone will ask you. WHY now!
- When one of the 20% that gives 80% of your sales fails, the business financial recovery will come out of one or more of the 80% that was providing just 20% of the business previously.
Resent conversation outcomes
I have had three conversations with business owners in the last couple of weeks that fit the business mix profile above.
In all three conversations, they have been happy to own that they had knowledge of the principle and facts, but that they were or had not thought of doing something about it recently.